RECOMMANDATIONS FOR INSURERS & REINSURERS
FOR UNDERWRITING ACTIVITES
April 2023

Summary
INTRODUCTION .............................................................................................................................. 2
GENERAL RECOMMENDATIONS ................................................................................................... 4
Climate scenarios to use to limit global warming to 1.5°C ..................................................... 4
Decarbonization targets ............................................................................................................. 4
Key alignment and company assessment resources .............................................................. 6
What shall a good climate policy contain? ............................................................................... 7
Scope of application of the climate policy ................................................................................ 8ENERGY SECTOR IN GENERAL ...................................................................................................... 9Company databases to be used ................................................................................................ 9
Points of attention for the oil and gas sector ......................................................................... 10
Definitions 11
COAL SECTOR ............................................................................................................................... 14
General sector overview ........................................................................................................... 14
Overall objectives ...................................................................................................................... 14
What to expect from companies ............................................................................................. 15
Recommendations on targeted restrictions ........................................................................... 16
OIL & GAS SECTOR ....................................................................................................................... 18
General sector overview ........................................................................................................... 18
Overall Objectives ..................................................................................................................... 18
What to expect from companies ............................................................................................. 18
Recommendations on targeted restrictions ........................................................................... 19
POWER SECTOR ........................................................................................................................... 21
General sector overview ........................................................................................................... 21
Overall objectives ...................................................................................................................... 21
What to expect from companies ............................................................................................. 22
Recommendations on targeted restrictions ........................................................................... 23
CLIMATE LOBBYING..................................................................................................................... 26

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

INTRODUCTION
Human activity has already warmed the world by about 1.1°C since pre-industrial times.1
As the IPCC has repeatedly warned, limiting global warming to 1.5°C is essential to avoiding
catastrophic changes to the environment and human life. Every additional increment of global
warming worsens the impact and even at 1.5°C – and even more so at 2°C – climate change
will have major consequences on our societies and ecosystems. Indeed, the consequencesof climate change have become painfully obvious in recent years.
However, according to the United Nations,2 current policies would lead to a 2.8°C temperaturerise by the end of this century and a rise of 2.4 to 2.6°C even if climate pledges are met.
According to the IPCC’s Sixth Assessment Report, CO2 emissions must be cut by 50%, andemissions of all major greenhouse gases (GHGs) by 45% by 2030 to stay on track to limit
global warming to 1.5°C.3 Only an urgent system-wide transformation can deliver thenecessary emission cuts.
Reducing GHG emissions requires a rapid reduction in fossil fuel supply and consumption,
and a commitment to this is a key climate policy litmus test. But, achieving cuts at this scalerequires breaking with current trends: governments are in aggregate planning to produce
around 110% more fossil fuels in 2030 than would be consistent with limiting global warming
to 1.5°C, and 190% more by 2040.4 Existing and currently planned fossil fuel infrastructurealone would emit about 850 GtCO2, 350 GtCO25 more than the quantity of CO2 that humanity
can still emit to keep global warming at 1.5°C.6
The last eight years have been the warmest year on record.7 Between 1970 and 2019, 4.6
million people died in 22,300 disasters associated with natural hazards, causing US$4.9
trillion in economic losses.8 In 2021, natural disasters caused overall losses of US$280
billion.9
If urgent action is not taken, climate change could cost the world’s economy US$178 trillion
by 207010. The cost of adapting to climate impacts is expected to grow to US$160-340 billion
per year by 2030, and US$315-565 billion per year by 2050.11 Moreover, the cost of
humanitarian assistance due to the climate crisis could double by 2050 (US$20 billion peryear),12 and 216 million people could be forced to migrate within their own countries by 2050.13
By contrast, bold climate action could deliver US$2614 to US$4315 trillion in economic benefits
through to 2030, compared with business-as-usual.
As natural disasters increase in frequency and intensity, insurers and reinsurers are facing
ever greater risks related to climate change. While this has only happened three times in 30
years (between 1991 and 2020), the $100 billion mark in insured losses from natural disasters
has been passed in the last two consecutive years (2021 and 2022). 16 The losses incurred in
the last two years are part of a continuing trend of increasing losses for insurers related toclimate risks: the average insured loss between 2012 and 2021 was $81 billion compared to$110 billion over the 2017-2021 period.
2 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1
In light of the urgent situation explained above, this document lays out essential demands for
insurers to align with the international goal of limiting global warming to 1.5°C.

3 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

GENERAL RECOMMENDATIONSClimate scenarios to use to limit global warming to 1.5°C
Insurers shall adopt a climate policy aimed at contributing to the goal of limiting global
warming to 1.5°C, which entails reducing CO2 emissions by about 50% by 2030 and reachingnet-zero CO2 emissions by 2050 at the latest. This plan must be developed based on credible
and robust science-based scenarios.
Alignment and carbon neutrality commitments and pledges mean that insurers’ emissions
targets are based on no or low overshoot 1.5°C pathways with limited use of negativeemissions. Relying on large quantities of negative emissions increases the risk ofovershooting the temperature target in case carbon capture technologies and solutions are
not deployed or effective at scale and/or do not ensure the permanence of the GHG removals.
In the present document, the term “1.5°C scenario” is used as shorthand for low or noovershoot 1.5°C scenarios with limited use of negative emissions.
When insurers refer to the Paris Agreement, they shall make it clear that they are aligning with
the Agreement’s stronger target of limiting global warming to 1.5°C, not the weaker "wellbelow 2°C" objective.
It is recommended to use the following scenarios for referring to 1.5°C global scenarios withno or low overshoot and limited use of negative emissions:•••

One Earth Climate Model (OECM) by the University of Technology Sydney Institute for
Sustainable Futures and supported by the UN-Convened Net-Zero Asset Owner
Alliance (NZAOA). The OECM includes the use of nature-based removals increasingover time to 1.4 GtCO2 per year by 2050 to compensate for cement process emissions.
It does not use technological carbon capture and storage. It includes regional data,and sectoral pathways covering Scope 1, 2 and 3 emissions.
The Net-Zero Emissions by 2050 Scenario (NZE) by the International Energy Agency(IEA). This was first published in May 2021 and updated in the October 2023 World
Energy Outlook. It includes technology-based removals (direct air capture (DAC) andbiomass energy with carbon capture and storage (BECCS)) ramping up to 1.5 GtCO2
per year in 2050.17
The 26 1.5°C no or low overshoot scenarios published in the IPCC’s 6 th Assessment
Report and identified by the International Institution for Sustainable Development(IISD) as not relying on unrealistic amounts of negative emissions. 18

Decarbonization targets
The decarbonisation targets for the portfolios of insurers and reinsurers must be based on
two complementary approaches:

4 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1-

Portfolio coverage approach: targets covering the entire insurance and reinsurance
portfolio-

Sectoral approach: targets by industrial sector based on the best available sciencebased 1.5°C scenarios (for example, the IEA NZE scenario for the energy sector).

Decarbonization targets shall cover all insurance and reinsurance products. This isparticularly the case for property and casualty insurance lines for both insurance packages
and project insurance (singlesite/standalone insurance policy).
Decarbonization targets adopted by insurers shall:•

Include interim and long-term targets – The long-term target of net zero emissions by
2050 at the latest shall be accompanied with a target for 2030 consistent with theRace to Zero criterion of a “fair share” of the 50% global cut in CO2 emissions requiredby 2030. An interim target for 2025 should also be set, as is required by the NZAOA. In
advance of 2030, targets should be set for 2035 and 2040.

•

Include absolute and intensity metrics – Targets shall be set in absolute GHG
emission reductions to ensure they result in real-world reductions aligned with 1.5°C
pathways. Absolute targets can be supplemented with both physical- and revenuebased intensity indicators to facilitate comparisons of ambition and progress within
sectors, and between portfolios, financial institutions, and regions.19•

Cover all material emission scopes – Targets shall cover all investee emission scopes
where these are material. Where data quality is low, proxy or estimated data should be
used as per the methodology of the Platform for Carbon Accounting Financials(PCAF),20 and insurers should engage with investees and regulators to promote
improved disclosures. As is noted by GFANZ, “Scope 3 should be included at aminimum for high-emitting sectors, such as the priority sectors identified in the NZAOA
target-setting protocol.” Among these sectors are oil and gas, utilities (including coal),transport, steel, cement, agriculture and forestry, and chemicals.21•

Differentiate between GHGs – Targets should be set in CO2-equivalent to measure
overall warming impact with separate targets for CO2 and CH4 in the energy sector,
and for other GHGs as relevant for other sectors (e.g., N2O for agriculture, andindustrial gases for relevant industrial sectors). Using only CO2e targets makes it
impossible to measure progress toward reducing individual gases and to compare
targets and progress with scenarios based on specific gases (such as NZE which ismainly CO2 based).

•

Cover all asset classes – Targets shall cover all asset classes for which financed
emissions are material and for which methodologies exist, in particular listed equity
and corporate bonds, business loans and unlisted equity, project finance and private
equity.22

5 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1•

Not include offsets – Serious methodological and conceptual problems withoffsetting mean that portfolio and sectoral targets must not be wholly or partially met
with the use of offsets by investees or insurers. This is consistent with the position of
the Science Based Targets initiative (SBTi) and the UN Race to Zero Campaign.

•

Be transparent and accountable – Insurers’ transition plans should clearly specify
target timetables, metrics, scopes, gases covered, and asset classes and sectors
included. Transition plans should outline what actions will be taken to meet the targets,
including engagement strategies with financial sanctions. Reporting on progress
toward meeting targets should be done annually and verified by third parties. If any
targets are missed, emission reductions will need to be steeper in future tocompensate.

Key alignment and company assessment resources
While assessing the decarbonisation trajectories of portfolio companies is a relevant exercise,
it is only complementary to robust sectoral policies.
It is recommended to use the following resources for:••

Building financial institution transition plans in line with a 1.5 °C Scenario:o The recommendations from the UN High-Level Expert Group (HLEG) on net
zero, published during COP27, that provides key criteria for all carbon neutrality
and alignment commitments and plans.
o The criteria of the UN Race to Zero Campaign. The Net Zero Insurance Alliance(NZIA) is a partner of Race to Zero, as are all the sectoral alliances that makeup the Glasgow Financial Alliance for Net Zero (GFANZ).
o GFANZ’s November 2022 report, “Financial Institution Net-zero Transition
Plans: Fundamentals, Recommendations and Guidance.”
Assessing the credibility of the corporate and financial institution transition plans:o The Science Based Targets initiative (SBTi) and its sectoral target-setting
methodologies and validation process. Science-based targets are useful toassess whether companies have set decarbonization targets aligned with theParis Agreement, but are not in themselves sufficient to do so. They do not
ensure that companies are on track to meet these targets, nor that they are
implementing the changes in business models and activities that arenecessary for 1.5° scenarios.
o The Climate Action 100 + benchmark by 5 investor networks (PRI, AIGCC,
Ceres, IGCC and IIGCC). This benchmark provides some useful indicators toassess the credibility of company transition plans, notably regarding carbon
neutrality and intermediate decarbonization targets, climate disclosures,
governance and capex allocation.

6 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1
The Assessing Low Carbon Transition (ACT) by the French Environmental
Agency (Ademe) and the CDP. The intent of this methodology is to provide a
granular analysis of company transition plans and their implementation. While
the overall rating attributed does not provide a clear benchmark for alignment
with a 1.5°C trajectory, the methodology contains useful information and datathat can be used to assess the credibility of transition plana.
o The PACTA scenario analysis program, now hosted by RMI.
Assessing the quality of fossil fuel policies adopted by financial institutions:o Reclaim Finance has developed the Coal Policy Tool and the Oil & Gas Policy
Tracker. These analyse the quality of the policies adopted by banks, insurers,
asset owners and insurers.
o•Transition Pathway Initiative (TPI)23 assessments should be used with caution as these
consider that a company has a credible climate policy only by considering the date at which
the level of GHG emissions reaches that of a 1.5°C scenario, whereas for a trajectory to betruly aligned, the entire projected carbon budget must be considered.

What shall a good climate policy contain?
A credible and comprehensive climate policy must be made public and contain a range ofgeneral and sectoral measures, including commitments, restrictions, and exclusions.
A comprehensive climate policy shall include the following elements:•

Decarbonization targets for insurance-associated emissions. These allow insurers toalign their underwriting activities with the 1.5°C scenarios described above, and withthe 50% reduction in CO2 emissions required by the Race to Zero, based on thefindings in the IPCC’s Special Report on 1.5°C and Sixth Assessment Report.

•

Sectoral policies presenting expectations and restrictions, with priority given to themost emitting sectors. Adopting decarbonization targets is by no means sufficient toensure corporate alignment with a 1.5°C scenario. Indeed, the fight against climatechange implies concrete actions with a real impact on the economy and the energy
mix. Thus, the objectives of reducing GHG emissions must be associated withmeasures and indicators that will lead to the decline of the most polluting activities on
the one hand, and the development of alternative solutions on the other. Sector
policies shall clearly and precisely explain what is expected from companies active inthe sector and how these requests are formulated through the side letters associatedwith insurance coverage. Policies must also explain the engagement and exclusion
measures that insurers will implement in order to secure the alignment of insured
companies with these expectations.

•

Governance, executive remuneration and lobbying policies, which must be madeconsistent with the overall climate policy.

7 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

Scope of application of the climate policy
The climate policy shall apply to all insurance portfolio, including those managed bysubsidiaries.
The (re)insurer’s climate policy shall apply to the following insurance business lines:-

Property lines, including but not limited to Construction and Engineering Lines(Contractors' and Erection All Risks (CAR/EAR) .

-Casualty lines, including but not limited to liability insurance (Directors & Officers
insurance – D&O)-

Surety bonds-

Health and Disability insurance, including those for workers’ compensation.

The climate policy shall apply to all form of insurance coverage, including single-site, standalone and package insurance for insurers, and including facultative reinsurance and treaty
reinsurance (or obligatory reinsurance). Insurance consulting services shall all be covered.
Coverage restrictions shall apply to all clients, including their captives.
In this document, the term "(re)insurance coverage" means any type of insurance activity
among those listed above.
Any update of the climate policy shall be accompanied by a communication on the number ofclients and the amount of premiums affected by the new exclusion thresholds, or by any
change coming from the data provider.
Any exceptions to the climate policy should be limited in scope, limited in time, publicly
disclosed, justified, and detailed. A list of projects and companies benefiting from these
exceptions should be published annually.

8 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

ENERGY SECTOR IN GENERAL
Company databases to be used
For their sectoral coal policies, insurers shall use the Global Coal Exit list (GCEL), updated
annually by Urgewald. This list gives access to information about 2,800 companies playing asignificant role in the thermal coal value chain (coal miners, coal power producers, companies
involved in coal exploration, processing, trading, transport, logistics, engineering,transmission, equipment manufacturing, coal to gas/liquids production, coal-related services
in operation & maintenance/mining/procurement and construction/advisory, undergroundcoal gasification, and other coal-related activities), which meet at least one of the following
criteria:••••

Companies with coal power, coal mining or coal infrastructure expansion plans.
A coal share of revenue or power production of at least 20%.
An annual thermal coal production of at least 10 Mt.
An installed coal-fired power capacity of at least 5 GW.

These thresholds will be lowered to 10% at the end of 2023 for the next update of the GCEL.
The GCEL includes information on companies planning the addition of an annual productionof 2500 Mt of coal, and 476 GW of new coal power capacity. It also covers companies withplans to build new coal infrastructure such as ports or railways which can be instrumental in
the opening of new coal basins. Companies with expansion plans shall be the first ones to be
excluded since any new coal project is incompatible with a 1.5°C scenario. This allows
financial players not only to take measures aimed at protecting themselves against financial
risks, but also allowing them not to contribute to the aggravation of the climate crisis.
The GCEL also covers companies above a specific relative threshold, referring to the share of
their activity in the coal sector, regardless of their size. The metrics used for power companies
are the share of coal power generation for power companies first, the closest to the realclimate impact of a company, and then the share of power capacity in the absence of the first
metric. The last metric used is the share of revenues of the company, if the two first metrics
are not available, because it is less relevant to the real climate impact of the company andcan vary considerably from one year to another. The share of revenues is the only metric used
for other coal-related companies such as coal mining or coal infrastructure companies. These
different metrics are important because the use of different metrics can have an important
impact on the number of companies covered by a specific threshold.
To be able to cover companies whose share of activity in the coal sector is low, but which
produce large quantities of coal or coal-fired electricity in absolute terms, the GCEL also uses
absolute thresholds for the coal mining and coal power sectors. The metric used for coalmining is the annual amount of coal produced in million tonnes per year (Mtpa). The metricused for coal power is the coal power capacity.

9 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1
For their sectoral policies in oil and gas upstream and midstream sectors, insurers shall use
the Global Oil & Gas Exit list (GOGEL), updated annually by Urgewald. This database gives dataon the activities of oil and gas companies according to the following criteria:
•
•
•
•
•
•
•
•

Total oil and gas production.
Unconventional oil and gas share of production.
Total short-term expansion plans.
Share of unconventional oil and gas short-term expansion plans.
IEA NZE expansion overshoot
Capital expenditures on oil and gas exploration.
Fossil fuel share of revenue.
Reputational risk projects.

Other databases provided by private market players could be used in addition to the GCEL and
GOGEL, in particular to cover the downstream of the oil and gas sector. However, werecommend insurers to use them with caution: forward-looking data about the expansion
plans of companies and their activities in some unconventional oil and gas sectors might be
missing, as well as granular information necessary to identify the relevant corporate level(group and subsidiaries) exposed to a specific activity. Insurers should also make sure thatthe definitions used match their own policies.

Points of attention for the oil and gas sector
In order to evaluate a company’s exposure to a specific sector, its impact on that sector andits decarbonization pathways within that sector, it is recommended to use a metric based on
absolute values (mmboe in production or in reserve, tCO2e in scope 1, 2 and 3, etc.). 24 Relativevalues (% of revenue, % of number of companies, % of GHG emissions, % of power assets firedby coal or with more than X gCO2e/kWh in average, etc.) can eventually be used as anadditional indicator applicable to the whole value chain or for specialized companies (joint
ventures dedicated to a specific project, oil and gas service companies, mining or coal powercompanies, etc.).
When insurers have adopted measures related to unconventional oil and gas, it isrecommended to use a definition matching the one used by the GOGEL, which includes thefollowing sectors:
•
•
•
•
•
•

Extra heavy oil (API gravity index < 15)
Tar sands
Coal bed methane
Fracking
Ultra-deep offshore oil and gas (depth > 1,500 meters)25
Oil and gas resources located in Arctic area as defined by the Arctic Council’s
Assessment and Monitoring Programme (AMAP)26

10 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1
Insurers could also rely on the definition recommended by the Scientific and Expert
Committee of Paris’ Observatory of Sustainable Finance27, which also includes tight oil andgas,28 gas hydrates,29 and oil shale.
Where the oil and gas sector policy refers to the upstream, midstream and downstream
sectors, particularly in the expectations for portfolio companies’ climate transition plans, thebreakdown of associated activities to which it applies shall be read as follows.30
Upstream
Exploration
Drilling
Production
Processing

Midstream
Transportation by rail, road,pipeline, and shipping
Pure trading
Storage
Gas Liquefaction
LNG regasification

Downstream
Oil Refining
Distribution
RetailUse (power, heating, etc.)
Energy efficiency services

Where the oil and gas sector policy refers to Scope 1, 2 and 3 GHG emissions, particularly inthe expectations for portfolio companies’ climate transition plans, the breakdown of thedifferent associated emissions sources to which it applies is as follows:

Source: ACT Methodology for the Oil and Gas sector (ADEME, CDP)

Definitions
This section provides definitions of some important terms used in this document.
Company in transition – A company with a credible decarbonization plan aligned with a 1.5°C scenario with low or no overshoot and a limited volume of negative GHG emissions,
including at least a comprehensive and public climate transition plan, and respecting key
milestones such as the end of fossil fuel expansion.

11 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1
Climate transition plan (for companies) – A set of commitments, implementation andmonitoring measures undertaken by a company to contribute to the fight against global
warming. Such a policy must be comprehensive and credible and shall aim at contributing tolimiting global warming to 1.5°C with low or no overshoot and a limited volume of negative
GHG emissions. The plan should be sufficiently legible to be easily assessed by insurers.
Climate policy or climate transition plan (for insurers) – A set of general and sectoral policies
adopted by insurers to publicly detail how they intend to decarbonise their portfolios along a
1.5 °C scenario with low or no overshoot and a limited volume of negative GHG emissions.
This shall include, at least, short-, medium- and long-term decarbonisation targets, systematic
engagement, voting, governance, and good lobbying practice policies, as well as sectoral
engagement, and restriction measures.
Coal developer – Companies are identified as coal developers if they meet at least one of thefollowing criteria:•••

Mining: companies engaged in coal exploration activities, planning to develop newcoal mines, extend their coal mines by applying for new permits or that are involved incoal exploration activities.
Power: companies planning to develop new coal-fired power capacity of at least 100
MW prorated (based on a company’s ownership of a project, or on the number ofcompanies involved in a project).
Services: companies involved in the development or expansion of coal transportation
assets or infrastructure assets dedicated to support coal mines, coal transportationand coal-to-gas facilities.

Such companies are listed in the “Expansion” criteria of the Global Coal Exit List.
•••

Companies extending the lifetime of existing coal mines and/or coal plants.
Companies purchasing existing coal assets.
Companies selling services or equipment supporting coal expansion.

Oil & gas developers - Companies intending to add oil and/or gas resources to theirproduction capacities in the short term (at least 20 mmboe of resources to their production
portfolio in the near future), i.e. resources associated with assets under development and field
evaluation (the two stages preceding production), or in the long term by their involvement in
exploration activities, or II) companies with oil and/or gas pipelines or LNG terminals proposedor under construction.
Exclusion – A measure consisting of the total exclusion of a type of activity, company, or
project from a financial portfolio and/or financial service offerings. The date and modalities
of entry into force of such a measure must be precisely defined.
Infrastructure coal project – Transportation assets or infrastructure assets dedicated tosupport coal mines, coal transportation and coal-to-gas facilities.

12 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1
New upstream oil and gas projects – Exploration or development of new oil and gas fields(i.e. fields that are not yet in production), or the redevelopment or expansion of existing fields
already in production.
New midstream oil and gas projects – Development of new oil and gas transportation andstorage infrastructure.
Power producer – Company involved in the production of electricity, either as a utility or as noperator of power generation facilities.
Restriction – A measure consisting of the partial exclusion of a type of activity, business or
project from the financial portfolio and financial service offerings (e.g., ending some but not
all financial services to these activities, or excluding them from a type of assets but not all).
The restriction may be related to being temporary, being subject to a threshold or having
specific exemptions.
Sustainable power – In contrast to “unsustainable power”, this means electricity production
or storage from renewable energy sources by installations with limited climate andenvironmental impact throughout the value chain, including in the future.
Unabated power plant – Power plant with no facilities to capture GHG emissions during
operation.
Unsustainable power – In contrast to “sustainable power”, this means electricity productionthat has a significant impact on the climate and the environment throughout the value chain
in which it operates, including in the future. This includes nuclear, industrial-scale biogas andbiomass-fired power plants, hydropower plants that do not comply with the recommendationsof the World Commission on Dams31, and any form of hydrogen that is not produced directlyfrom renewable energy source (or “green hydrogen”).

13 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

COAL SECTOR
General sector overview
The coal sector is a long way from aligning with 1.5 °C and even continues to expand. Today,
2,400 coal-fired power plants are in operation, with a total capacity of nearly 2,100 GW.32
Global coal use is set to rise by 1.2% in 2022, surpassing 8 billion tonnes in a single year for
the first time and eclipsing the previous record set in 2013.33 476 GW of new coal-fired power
capacity are still in the pipeline worldwide (enough to increase the world’s current coal power
capacity by 23%), 61% of this in China.34
Only 27 of the 1,064 listed in the Global Coal Exit List have announced coal exit dates alignedwith a 1.5 °C scenario, and 490 of them still plan to develop new coal assets. 2,500 Mtpa of
new coal mining capacity is in the pipeline worldwide (37% of the world’s current thermal coalproduction), with 39% of this in China.35
Any delay in phasing out coal would jeopardize meeting the 1.5°C target and significantly
increase financial risks. Coal companies risk wasting more than US$1.4 trillion in stranded
assets under a 1.5°C scenario.36 42% of global coal power plants already run at loss, this could
rise to about 50% of the thermal coal capacity by 2030, and 72% would be unprofitable by2040. In a “below 2°C” scenario, investors and governments would likely face over US$267
billion in stranded assets. 37
Beyond its major contribution to global warming, coal poses serious environmental and publichealth issues: air pollution from outdoor sources caused more than four million premature
deaths in 2021 (85% of which were in emerging and developing countries), and coal was
responsible for over 60% of global SO2 emissions.38 The IMF estimated the world can realize
a global net social benefit equivalent to US$85 trillion by phasing out coal.39

Overall objectives
According to the IPCC,40, UNEP41 and the IEA,42 for the coal sector to be aligned with theobjective of limiting global warming to 1.5°C, several conditions must be met.
•••

The development of coal mines must stop immediately: 89% of coal reserves provenin 2018 must remain unextracted in 2050.43 Therefore, no new coal mines must be
developed, and the lifetimes of existing mines must not be extended.44
Investment in coal supply must fall by 75% from 2021 to 2030, with the remaining coalrelated investment focused on maintaining production at existing mines and on
reducing their emissions intensity while waiting for definitive closure.
Coal demand must fall by 45% by 2030, and by 90% by 2050 (reaching 540 million
tonnes of coal equivalent (Mtce))45 and all coal power plants must be closed by 2030
in advanced economies and by 2040 worldwide.46 As a result, coal trade must decline
to about 50% its current level by 2030, and 90% by 2050.47

14 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1•

Coal mine methane emissions must decline about 70% from 2021 levels by 2030 andabout 95% by 2050.48. This result can only be achieved through large-scale mineclosures.49

What to expect from companies
Insurers shall expect from covered coal companies not to have any coal expansion plan, andto adopt a credible and public coal phase-out plan aligned with a 1.5°C scenario. Such a plan
shall include, at least, the following indicators:50✓ A commitment to close all the global coal facilities in the OECD and European
countries by 2030, and globally by 2040.
✓ No expansion plans.
✓ Facility-by-facility closure dates.51 Assets shall not be sold or converted to fossil-based
activities or biomass.
✓ Just and sustainable transition plans, including guarantees concerning the capacity tofund and implement all worker and environmental obligations (decontamination,
retraining, infrastructure decommissioning, etc.)52✓ A commitment not to open any new met-coal mine or to expand any existing met-coalmine.
In case the facility is not closed but sold, insurers shall expect strong guarantees from thecoal company that the new owner will:•••

Close the facility before 2030 if it is located in the OECD or European countries, orbefore 2040 elsewhere.
Not convert coal plants to fossil fuel-fired or biomass-fired plants.
Provide sufficient financial means and measures to ensure that all social andenvironmental obligations are duly met.

In case the facility is not closed but converted to another use, insurers shall expect strong
guarantees from the coal company that:•••

A comparative analysis shows that this conversion is economically, ecologically,financially, and technically more advantageous than closure or replacement by
renewable energies with equivalent production capacity.
An environmental and climate impact assessment demonstrates that the conversion
will not result in increased GHG emissions across the value chain (and not just at the
combustion stage).
A closure deadline consistent with a 1.5°C scenario with a just and sustainabletransition plan, including guarantees concerning the capacity to fund and implement
all worker and environmental obligations.53

15 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1
Claims of future retrofitting with carbon capture and storage (CCS) or conversion to fossil gas,
biogas, hydrogen, biomass, or ammonia co-firing shall not be used to delay coal-fired plantclosures.54
Insurers shall not consider a decarbonization target or a net-zero commitment as a substitutefor a credible coal phase-out plan, regardless of their validation by the SBTi.

Recommendations on targeted restrictions
Insurers shall adopt time-bound restrictions on coal companies, with the aim of preventing
the expansion of the coal sector and supporting its phase-out. Achieving these measures will
require insurers to:✓ Make public their expectations from coal companies and associated exclusions.
✓ Implement an engagement policy towards the relevant companies to induce them tomeet expectations.
✓ Implement a progressive escalation strategy that would ultimately lead to the end of
insurance coverage in case the expectations are not met.
Insurers shall immediately end support to coal expansion by:✓ Ceasing covering companies which participate in the expansion of the coal sector.
✓ Ceasing new insurance coverage in coal mines, plants, or infrastructure projects.
Insurers shall commit to no longer cover coal projects and companies active in OECD and
European countries by 2030, and by 2040 worldwide.
Insurers shall adopt timed exclusions to progressively reduce their exposure to the coal sector
and encourage companies that remain covered to reduce their coal activities and aim for fullexit:
✓ No longer provide insurance coverage to companies which derive more than 10% of
their revenues from coal mining, and of companies which produce annually more than
10 million tons of coal.55✓ No longer provide insurance coverage to companies which derive more than 10% of
their power production or installed power capacity from coal, and of companies withmore than 5 GW of coal-fired power capacity.56
Until December 2024, companies that are above these exclusion thresholds may be exempted
if they demonstrate their practical ability to move below the exclusion thresholds in the shortterm through the implementation of a credible and public coal phase-out plan.
✓ Commitment to reduce the relative and absolute exclusion thresholds used in the coal
policy to zero, with the aim to exit completely from coal by 2030 in OECD and European
countries, and by 2040 worldwide.

16 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1
✓ Immediate commitment to no longer provide insurance coverage by 2027 companies
that do not have a credible and public phase-out plan, aligned with a 1.5°C scenario,
which includes, at least:→ A detailed asset-by-asset closure (and not selling) timetable aligned with theobjective to exit from the coal sector by 2030 in OECD and European countries,
and by 2040 worldwide.
→ A just and sustainable transition plan for workers, local communities, and theenvironment.57✓ Immediate commitment to no longer provide insurance coverage:→ From 2024, to companies with no public commitment to phase-out their coal
activities by 2030 in OECD and European countries, and by 2040 worldwide (norenewal in 2023).
→ From 2025, to companies with no detailed asset-by-asset closure (and not
selling) timetable aligned with the objective to exit from coal by 2030 in OECDand European countries, and by 2040 worldwide (no renewal in 2024)→ From 2026, to companies with no credible coal phase-out plan aligned with a
1.5 °C scenario, completed with a just and sustainable transition plan forworkers, local communities, and the environment (no renewal in 2025).58✓ Immediate commitment to no longer provide insurance coverage to companies thatsells (and does not close) a coal asset, unless the new owner offers sufficientguarantees that the asset will be closed by 2030 in OECD and European countries, andby 2040 at the latest elsewhere via a just and sustainable transition plan for workers,
local communities, and the environment.59
An exception to the above measures may be made for insuring project or subsidiaries
dedicated exclusively to the energy transition (e.g., the deployment of renewable energy).
This exception must remain temporary, and only apply for the time needed for the company
to align its corporate strategy with a 1.5°C scenario.
N.B.: Insurers shall disclose the database used to evaluate the companies exposed to the coalsector. It is therefore recommended to use the GCEL.

17 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

OIL & GAS SECTOR
General sector overview
Over half of global emissions are related to the production or use of oil and gas
Instead of aligning with the 1.5 °C, oil and gas companies are continuing to develop massive
new capacity for oil and gas production and transport. In 2022, investment in upstreamincreased by 13% compared to 2021.60 According to the IPCC, cumulative capex/opex for the
exploration and extraction of oil and gas in new fields is expected to reach more than US$4.2
trillion in total between 2020 and 2030 and climb to US$570 billion annually by the end of thedecade.61
The massive gap between industry projections of oil and gas production trajectories and a
1.5°C scenario increases related financial risks: over $1 trillion of oil and gas assets risk
becoming stranded if climate actions are taken and alternative energy sources aredeveloped.62

Overall Objectives
According to the IPCC, UNEP and the IEA, for the oil and gas sector to be aligned with a 1.5°C
scenario, the expansion of oil and gas production must stop immediately. No exploration for
new resources is required, and no new oil fields are necessary, beyond those alreadycommitted as of 2021. No new fossil gas fields are needed beyond those already underdevelopment. Many of the LNG facilities currently under construction or at the planning stage
are not needed.
According to the IEA’s World Energy Outlook 2022, declining demand for oil and gas in their
NZE scenario can be met “through continued investment in existing production assets without
the need for any new long lead-time projects.”63 In the NZE, fossil gas demand drops from4,200 billion cubic meters (bcm) in 2021 to 3,300 bcm in 2030, and 1,200 bcm in 2050. Oil
demand drops from 95 million barrels per day (mb/d) in 2021 to 75 mb/d in 2030, and to lessthan 25 mb/d in 2050.64
Investments in oil and gas decline even faster than demand in the NZE, falling by around 50%
from the 2017-21 average through 2030 for both oil and fossil gas.65 Continued investment inexisting fossil fuel operations is needed to reduce their emissions-intensity, especially of
methane. Energy-related methane emissions drop by 75% by 2030 in the NZE throughreducing leakage and venting and decreasing fossil fuel extraction.66

What to expect from companies
Insurers shall expect oil and gas companies operating in upstream and midstream sectors tocommit to cease their expansion plans and to meet, in the short-term, the following minimal
criteria:
18 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1
✓ Immediately commit to a 2050 net-zero objective based on a 1.5°C scenario.
✓ Meet milestones, including:→ End of new upstream and midstream oil and gas projects.
→ Adoption of oil AND gas production reduction targets by 2030.
→ Allocation of most of capex to sustainable power.67✓ Adopt a comprehensive climate transition plan that allows investors to assess itsalignment with a 1.5°C with low or no overshoot and a limited volume of negative GHG
emissions.
✓ Commit to submit the above-mentioned plan and an assessment of its ongoing
implementation in recent years to an annual vote (“Say on Climate”) at the AGM.
A comprehensive climate transition plan shall include, at least, the following indicators:✓ Short- and medium-term GHG emissions reduction targets on Scopes 1, 2 and 3,
expressed in both absolute and intensity terms, encompassing all its activities.
✓ Possible contribution of captured GHG volumes to achieving emissions reduction
targets.
✓ Any carbon offsetting approaches that may be implemented to complement the
reduction targets.
✓ Targeted energy mix evolution for short- and medium-term.
✓ Short- and medium-term capex plans disaggregated by activity and by allocation
between maintenance and development of the Company’s assets.
✓ Short- and medium-term opex disaggregated by activity and by cost item.
✓ Explanation of baseline scenario used to set decarbonization targets and how thistakes into account the best available science.
✓ Envisaged actions to reduce methane emissions along the value chain, including
flaring, leakage control and venting.68

Recommendations on targeted restrictions
Insurers shall adopt time-bound restrictions on a growing number of oil and gas companies,
with a focus on halting expansion, as well as initiating a controlled decline in oil and gas
production. Achieving these measures will require the insurers to:✓ Make public its expectations from oil and gas companies and associated exclusions.
✓ Implement an engagement policy towards the relevant companies to induce them tomeet expectations.
✓ Implement a progressive escalation strategy that would ultimately lead to investment
restrictions and exclusions in case the expectations are not met.
✓ Insurers shall adopt restrictive measures over time to induce oil and gas companies
to stop their oil and gas expansion plans with an immediate commitment to no longer
provide insurance coverage, by 2025, to all companies that are still involved in new
upstream and midstream oil and gas projects (no renewal in 2024).

19 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1
Insurers shall commit to reducing their insurance portfolio exposure to oil and gas companies
to close to zero by 2050 worldwide.
Insurers shall adopt restrictive measures over time to gradually reduce their exposure to oiland gas companies and to induce these companies to undertake a managed decline in oil andgas production and operation by:✓ Provide insurance coverage only to oil and gas companies that committed to a net
zero target by 2050 aligned with a 1.5 °C scenario.
✓ From 2024, provide insurance coverage only to oil and gas companies that would haveadopted:→ Reduction targets by 2030 in oil AND gas production.
→ A comprehensive climate transition plan that allows investors to assess it
against a 1.5 °C scenario as a benchmark.
→ This climate transition plan is submitted to an annual vote at the AGM.
An exception to the above measures may be made for insuring project or subsidiaries
dedicated exclusively to the energy transition (e.g., the deployment of renewable energy). This
exception must remain temporary, and only apply for the time needed for the company to alignits corporate strategy with a 1.5°C scenario.
N.B.: These recommendations come on top of the recommendations made in “Power sector”.
In the case when a policy is adopted on unconventional fossil fuels, insurers shall apply it to
the activities and products listed in the comprehensive definition given in the “General
Recommendations for the energy sector”, and they shall no longer provide insurance coverage
to companies that:✓ Produce more than 25% of their oil and gas from unconventional resources andcommit to lowering this threshold to 5% by 2030.
✓ Are still involved in new unconventional oil and gas projects.
N.B.: Insurers shall disclose the database used to evaluate the companies exposed to the coalsector. It is recommended to use the GOGEL.

20 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

POWER SECTOR
General sector overview
Coal-fired power generation is one of the highest emitting sectors in the world. Although manyfinancial actors have already adopted restrictions on coal power funding, there are still 476
GW of new coal-fired power capacity still in the pipeline worldwide, 61% of this in China.69
It is estimated that 42% of global coal power plants now run at a loss, and this numbers is
projected to rise to 50% by 2030. By 2040, 72% will be unprofitable. Even with a “below 2°C”
scenario, investors and governments will likely face over US$267 billion in stranded assets.70
Despite its repeated depiction over the past couple of decades as a “clean alternative” to coal,fossil gas power emits high levels of GHGs, particularly when methane emissions from its
production and transport are considered. A fossil gas combined-cycle plant can emit 403 to
513 gCO2e/kWh from a life cycle perspective compared to 751 to 1095 gCO2e/kWh for coal
power.71
In 2022, for the first time, global energy transition investments equalled fossil fuels
investments.72 The significant shift toward “clean energy” is a trend unlikely to be reversed as
the energy world entered what the IEA describe as “a new industrial age – clean energy
manufacturing age”.73

Overall objectives
According to the IPCC, the UNEP and the IEA, for the power generation sector to be alignedwith a 1.5°C scenario, fossil fuel-fired power capacity must stop expanding and all unabatedplants should be closed by 2040 worldwide. In the OECD and Europe, coal-fired plants should
be closed by 2030 and fossil gas-fired plants by 2035.74 There must be an immediate halt toapprovals for new unabated coal-fired power plants.75. No new unabated fossil gas-fired
power plants shall be built since fossil gas-fired power plants commonly have an operational
lifetime of at least 30 years.76.
Investments in the power sector must be massively reoriented from fossil fuels toconservation, energy efficiency, and renewable energy. To meet the IEA’s NZE scenario, forevery one dollar spent globally on fossil fuels by 2030, at least nine dollars must be invested
in what the IEA classifies as “clean energy and efficiency investments”.77 In the NZE, 40% ofelectricity generation comes from wind and solar by 2030 when annual capacity additions of
all renewables reach 1,200 GW compared to the 290 GW renewables capacity installed in
2021. To achieve this, the annual spending on “clean energy investments” (energy efficiency,clean fuels and clean power, network and storage) needs to reach USD 4.2 trillion in 2030.
This requires a larger contribution from the private finance than seen today: whereas public
spending currently plays a larger role, private capital will account for nearly 60% of global clean
energy spendings (85% in advanced economies) by 2030.78

21 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

What to expect from companies
Insurers shall expect insured utilities and power generation compagnies to meet the following
minimal criteria:✓ Immediate commitment to a net zero by 2050 objective aligned with a 1.5°C scenario.
✓ Immediately stop coal expansion plans and commit to meet in the short-term thefollowing milestones:→ Stop new unabated fossil fuel-fired and biomass-fired plants.
→ Commit to end coal-related activities by 2030 at the latest in OECD and
European countries, and by 2040 worldwide.
→ Commit to bringing fossil gas-related activities close to zero by 2035 at thelatest in OECD and European countries, and by 2040 worldwide.
→ By 2030, for every dollar of capex investment spent in fossil fuel-fired power
sector, at least 4 dollars shall be invested in sustainable power.79 This ratio
shall be increased to 1:9 if it includes production, storage, transport and energy
efficiency measures.80✓ Adopt a comprehensive climate transition plan that allows investors to assess itsalignment with a 1.5°C scenario.
✓ Commit to submit the above-mentioned plan and an assessment of its ongoing
implementation to an annual vote (“Say on Climate”) at the AGM.
The climate transition plan shall include, at a minimum, the following indicators:✓ Short-and medium-term GHG emissions reduction targets on Scopes 1, 2 and 3,
expressed in both absolute and intensity emissions, encompassing all activities.
✓ Possible contribution of captured GHG volumes to achieving emissions reduction
targets.
✓ Carbon offsetting approaches that may be implemented to complement the reduction
targets.
✓ Targeted energy mix evolution over short and medium terms✓ Short- and medium-term capex plans disaggregated by activity and by allocation
between maintenance and development of any new assets.
✓ Short- and medium-term opex disaggregated by activity and by cost item.
✓ Explanation of baseline scenario used to set decarbonization targets and how thistakes into account the best available science.
Insurers shall require corporate climate transition plans to include a credible plan for dated
closures of unsustainable assets, detailed on a facility-by-facility basis. These closures must
be planned at a pace consistent with a 1.5°C scenario and accompanied by just transition
plans, and funding for implementing all social and environmental obligations.81
In case the plants are not closed but sold, insurers shall expect strong guarantees from thepower producer that any new owners will:

22 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1
✓ Close any coal plant before 2030 and any fossil gas-fired plant before 2035 if it islocated in the OCED or European countries, or before 2040 elsewhere.
✓ Not convert any plants to other fossil fuels or biomass.
✓ Provide sufficient financial means and measures to ensure that all social andenvironmental obligations are met.
In case the plants are not closed but converted to other technologies, insurers shall expect
strong guarantees from the power producer that:✓ A comparative analysis shows that this conversion is economically, ecologically,financially, and technically more advantageous than closure or replacement by
renewable energies with equivalent production capacity.
✓ An environmental and climate impact assessment demonstrates that the conversion
will not result in increased GHG emissions across the value chain (and not just at the
combustion stage).
✓ A closure deadline consistent with a 1.5°C scenario, with a just and sustainabletransition plan, including the guarantees concerning the capacity to fund andimplement all workers and environmental obligations.82
Claims that a future power plant will be retrofitted with carbon capture and storage (CCS) or
conversion to “low-carbon energy sources” (such as biogas or hydrogen83) shall not be used
to delay a fossil fuel-fired plant’s closure.84
Insurers shall not consider a decarbonization target or a net-zero commitment as a substitutefor a credible coal phase-out plan.

Recommendations on targeted restrictions
Insurers shall adopt time-bound restrictions on an increasing number of fossil fuel andunsustainable power projects and companies, aiming to prevent the expansion of fossil andunsustainable assets in the power sector, while supporting their progressive phase-out.
Achieving these measures will require the insurers to:✓ Make public its expectations from power generation companies and utilities, and any
associated exclusions.
✓ Implement an engagement policy towards the relevant companies to induce them tomeet expectations.
✓ Implement a progressive escalation strategy that would ultimately lead to a full
exclusion in case expectations are not met.
Insurers shall adopt restrictive measures over time to induce companies to stop their fossil
and unsustainable expansion plans in the power sector with an immediate commitment to nolonger provide insurance coverage:✓ To fossil, unsustainable and biomass power plants.
✓ To still involved in new coal plants.
23 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1
✓ To companies with no commitment not to develop new fossil fuel and biomass plants(an exemption to this restriction may apply until 2025 for companies subject toengagement from investors through Climate Action 100+).
Insurers shall commit to have no further insurance portfolio exposure to fossil fuel-fired andunsustainable power plants according to the following timeframe:✓ Unabated coal-fired power plants in OECD and European countries by 2030.
✓ Unabated fossil oil- and gas-fired plants in OECD and European countries by 2035.
✓ All unabated fossil fuel plants by 2040 worldwide.
Insurers shall adopt restrictive measures over time to gradually reduce their exposure to these
activities, while encouraging compagnies to plan a phase-out of their assets and support
renewable energy development by committing to:✓ No longer provide insurance coverage to companies which derive more than 10% of
their power production or installed power capacity from coal, and of companies withmore than 2.5 GW of coal-fired power capacity.85✓ Provide insurance coverage only to power producers that have adopted a net zerotarget by 2050 aligned with a 1.5°C scenario.
✓ From 2024, provide insurance coverage only to power producers that committed to:→ Bring their fossil fuel activities close to zero by 2035 in OECD and European
countries, and by 2040 worldwide.
→ Allocate most of their capex to renewable energy, excluding unsustainableenergy sources.
→ A comprehensive climate transition plan that allows investors to assess it
against a 1.5°C scenario as a benchmark and is subject to an annual
consultative vote at the AGM (as described above).
✓ No longer provide insurance coverage to companies that sells any fossil fuel-fired
plant, unless:→ In case the plants are not closed but sold, insurers shall expect strong
guarantees from the power producer that the new owners will:▪ Close any coal-fired plant before 2030 and any fossil gas—fired plant
before 2035 if the plant is located in the OCED or European countries,
or before 2040 elsewhere.
▪ Not convert any plant to other fossil fuels or biomass.
▪ Provide sufficient financial means and measures to ensure that allsocial and environmental obligations are met.
→ In case new biomass or fossil gas plants are allowed, or in case plants are notclosed but converted to another technology, insurers shall expect strong
guarantees from the power producer that:▪ A comparative analysis shows that this conversion is economically,
ecologically, financially and technically more advantageous thanclosure or replacement by renewable energies with equivalent
production capacity.
24 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1▪

▪

An environmental and climate impact assessment demonstrates thatthe conversion will not result in increased GHG emissions across thevalue chain (and not just at the combustion stage).
A closure deadline consistent with a 1.5°C scenario, with a just andsustainable transition plan, including guarantees concerning thecapacity to fund and implement all worker and environmental
obligations.86

An exception to the above measures may be made for the financing of activities or
subsidiaries dedicated to the energy transition (e.g. the deployment of renewable energy).
This exception must remain temporary, and only apply for the time needed for the company
to align its corporate strategy with a 1.5°C scenario.

25 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

CLIMATE LOBBYING
Insurers shall adopt a responsible lobbying policy consistent with a 1.5°C scenario.
All lobbying activities in which insurers participate and that are aimed at influencing public
officials (direct lobbying, such as governments, legislators, regulators, administration,international organisations, etc.) and public opinion (indirect lobbying, such as journalists,scientists, artists, etc.) shall apply to all their employees, subsidiaries and contractors, allbusiness areas, and all operational jurisdictions.
Insurers shall commit, through a published code of conduct, to:
•

•

•
•

•
•

•
•
•
•
•

•

Align climate change-related lobbying objectives and activities with a 1.5°C objective
and establish an annual monitoring and review process to ensure that all direct andindirect climate change lobbying activities follow this commitment.87
Disclose, for all geographies, the climate change related lobbying objectives andrecommendations (especially position papers submitted to public officials), as well as
the assessment of the influence that this lobbying has had on (a) supporting ambitious
public climate change policy, and (b) the company’s ability to deliver its own corporatetransition strategy.
Disclose, for all geographies, their membership of, support for and involvement in alllobbying groups engaged in climate change-related lobbying.
Establish a clear framework for escalation concerning misalignment between lobbying
positions adopted by these groups and the 1.5°C scenario88. This escalation should
include leaving such lobbying groups if their activities are detrimental to reaching the
1.5°C target.
Disclose the agenda of meetings with public authorities and the nature of the publicdecisions targeted by the lobbying activities.
Disclose the budget spent on climate change-related lobbying, including the budget
spent directly, through the previously mentioned lobbying institutions and throughconsulting firms or other external bodies.
Create or participate in coalitions that have specific purpose of lobbying in support ofthe 1.5°C objective.
Commit not to challenge the phase out of fossil fuel facilities through investor-state
dispute settlement mechanisms (ISDS) and other legal mechanisms. 89
Commit to disseminate only science-based, up-to-date and verifiable information orarguments, and not disseminate deliberately biased information.
Name a senior decision-maker who is responsible for implementing these policies.
Create or participate in coalitions with the specific purpose of lobbying in support ofthe 1.5°C objective. These should integrate all kind of financial institutions, data
providers, rating agencies, shareholder voting agencies, etc.
Sign the Global Standard on Responsible Climate Lobbying (RCLS) 90

26 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1
For more information, insurers can refer to the methodology of indicator 7 (Climate policy
engagement) set by the Climate Action 100+ and the Recommendation of the Council on
Principles for Transparency and Integrity in Lobbying published by the OECD.

27 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

1

World Meteorological Organization, Provisional State of the Global Climate in 2022, 2022

2

UNEP, Emissions Gap Report 2022, October 2022

3

The numbers in this table are rounded to the nearest 5. The Summary for Policymakers cites thenecessary reductions as 43% GHGs and 48% CO2. IPCC, Sixth Assessment report. Climate Change
2022: Mitigation of Climate Change, Technical Summary Table TS-2, p.71, April 2022.
4

UNEP, Production gap report 2021, October 2021

5

IPCC, Sixth Assessment report. Climate Change 2022: Mitigation of Climate Change, B.7.1, p. 20, April
2022)
6

Working group II of IPCC, Technical Summary of the 6th assessment report, November 2021

7

World Meteorological Organization, Eight warmest years on record witness upsurge in climate change
impacts, November 2022
8World Meteorological Organization, WMO Atlas of Mortality and Economic Losses from Weather,
Climate and Water Extremes (1970–2019), 2021
9

Munich Re, Hurricanes, cold waves, tornadoes: Weather disasters in USA dominate natural disasterlosses in 2021, January 2022
10

Ibid.

11

UNEP, Adaptation finance gap report, November 2022

12

ICFR, The cost of doing nothing, December 201913

World Bank, Groundswell Part 2: Acting on Internal Climate Migration, September 2021

14

Global Commission on the economy and climate, Unlocking the Inclusive Growth Story of the 21stCentury, 201815

Deloitte, Global Turning Point Report, May 2022

16

Swiss Re Institute, A perfect storm - Natural catastrophes and inflation in 2022, 2023
Reclaim Finance, The IEA’s net-zero 2050 : The new normal and what’s left to be done, December
2021
17

18

For more information: IISD, Lighting the Path: What IPCC energy pathways tell us about Paris-aligned
policies and investments, June 2022
19

For more information: GFANZ, Financial Institution Net-Zero Transition Plans: Fundamentals,
Recommendations and Guidance, pp.78-79, November 2022
20

PCAF, Financed Emissions: The Global GHG Accounting and Reporting Standard. Part A, December
2022

28 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

21

GFANZ, Financial Institution Net-Zero Transition Plans: Fundamentals, Recommendations andGuidance, p.77, November 2022
22

For methodologies see PCAF, Financed Emissions: The Global GHG Accounting and ReportingStandard. Part A, December 2022. NZAOA, Target-Setting Protocol 3rd edition, January 2023.
23

For more information : Reclaim Finance, The TPI benchmark: misleading approach, dangerous
conclusion, December 2021
24

The halt to expansion stipulated by the IEA in its NZE relates to the opening of new production fields.
Furthermore, the research of the analysts who built the GOGEL shows that the data on company
revenues is unfortunately very approximate. Indeed, private data providers, in the absence of accurate
reporting from companies, are often forced to estimate the share of revenues derived fromunconventional hydrocarbons from a production amount and a proxy on revenues.
Not only is the data unreliable, but this results in an underestimate of the share of unconventional incompanies' activities - for example, a 20% revenue criterion in shale gas covers a much smaller numberof companies than a 20% production criterion. Finally, a growing number of companies are diversifying,increasing their activities in midstream and power generation, without decreasing their hydrocarbon
production, including in unconventional. As a result, the share of unconventional oil in their revenues isdecreasing without a decrease in production in absolute value.
There is therefore no decrease in the climate impact of these companies. The revenue metric can bejustified when the assessment is carried out on all or a significant part of the value chain, beyond
production, even though it would be possible to have an assessment based on volumes transported forwhat comes under the midstream.
25

Energy Policy, The impact of water depth on safety and environmental performance in offshore oiland gas production, Volume 55, 2013, Pages 699-705, April 201326

For more information: Reclaim Finance, Drill, baby, drill. How banks, investors and insurers are driving
oil and gas expansion in the Arctic, September 2021
27

Observatoire de la finance durable, Recommandations du Comité Scientifique et d’Expertise portant
sur les hydrocarbures non conventionnels et les stratégies d’alignement, p. 10, Septembre 2021

29

Ibid.

30

ADEME, Methodology of ACT in Oil & gas sector, p. 10, February 2021

31

The World Commission on Dams, Dams and development. A new framework for decision-making,November 2000.
32

For more information : Global Energy Monitor, CREA, E3G, Sierra Club, SFOC, Kiko Network, CAN
Europe, LIFE, BWGED, BAPA, and Waterkeepers Bangladesh, Boom and bust coal 2022, April 2022
33

International Energy Agency, Coal 2022: analysis and forecast to 2025, December 2022

29 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

34

For more information : Urgewald, Global Coal Exit List 2022 : no transition in sight, October 2022

35

For more information : Urgewald, Global Coal Exit List 2022 : no transition in sight, October 2022

36

Environmental Research letters, Quantifying the regional stranded asset risks from new coal plants
under 1.5 °C, Volume 17, Number 2, February 2022)
37

Carbon Tracker, Powering Down Coal: Navigating the economic and financial risks in the last yearsof coal power, November 2018
38

International Energy Agency, Coal in Net Zero Transition: Strategies for rapid, secure, and peoplecentred change, November 2022
39

International Monetary Fund, The Great Carbon Arbitrage, June 2022

40

IPCC, Sixth Assessment Report: Mitigation of Climate Change, April 2022

41

For more information : UNEP, The production gap : Governments’ planned fossil fuel production
remains dangerously out of sync with Paris Agreement limits, November 2021
42

International Energy Agency, Coal in Net Zero Transition: Strategies for rapid, secure and peoplecentred change, November 2022
43

Nature, Unextractable fossil fuels in a 1.5 °C world, September 2021

44

International Energy Agency, Coal in Net Zero Transition: Strategies for rapid, secure and peoplecentred change, November 2022
45

Ibid.

46

Climate Analytics, Coal phase-out

47

International Energy Agency, Coal in Net Zero Transition: Strategies for rapid, secure, and peoplecentred change, § 1.4.3, November 2022
48

3.2.1 International Energy Agency, Net Zero by 2050 : A roadmap for the global energy sector, § 3.2.1,
October 2021
49

International Energy Agency, Coal in Net Zero Transition: Strategies for rapid, secure, and peoplecentred change, § 1.4.4, November 2022
50

For more information : Reclaim Finance, How to exit coal : 10 criteria for evaluating corporate coalphase-out plans, October 2021
51

For more information : Climate Analytics, Global and regional coal phase-out requirements of theParis Agreement: Insights from the IPCC Special Report on 1.5°C, September 201930 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

52

For more information : International Energy Agency, Phasing out unabated coal : current status andthree case studies, October 2021. Beyond Coal, Just transition in the context of European power utilities
and Insurers, August 2020.
53

Ibid.

54

For more information : International Energy Agency, CCS Retrofit : Analysis of the Globally Installed
Coal-Fired Power Plant Fleet, 2012. Bloomberg NEF, Japan’s Ammonia-Coal Co-Firing Strategy a Costly
Approach to Decarbonization, Renewables Present More Economic Alternative, September 2022
55

Urgewald’s GCEL currently lists 20%. They will be lowered to 10% of the in the updated plan of 2023.

56

Urgewald’s GCEL currently lists 20% of power production or installed power capacity from coalthresholds. They will be lowered to 10% of the coal share of power capacity in the updated plan of 2023.
57

For more information : International Energy Agency, Phasing out unabated coal : current status andthree case studies, October 2021. Beyond Coal, Just transition in the context of European power utilities
and Insurers, August 2020.
58

Ibid.

59

Ibid.

60

Les Echos, Les investissements repartent à la hausse dans l'exploration et l'extraction pétrolière,
January 2023
61

IISD, Lighting the Path: What IPCC energy pathways tell us about Paris-aligned policies andinvestments, June 2022
62

Carbon Tracker, Unburnable Carbon: Ten Years On, June 2022

63

International Energy Agency, World Energy Outlook 2022, p.164, November 2022

64

International Energy Agency, World Energy Outlook 2022, p.133-134, November 2022

65

International Energy Agency, World Energy Outlook 2022, Figure 3.22, November 2022

66

International Energy Agency, World Energy Outlook 2022, p.64, November 2022

67

According the Net-Zero-by-2050 scenario of the IEA, for every US$ 1 spent globally on fossil fuels in
2030, more than US$ 9 is spent on clean energy in the NZE. For more information : Reclaim Finance,
WEO 2022 – From the fossil fuel age to the clean energy era, October 2022.
68

International Energy Agency, Curtailing Methane Emissions from Fossil Fuel Operations Pathways toa 75% cut by 2030, October 2021
69

For more information : Urgewald, Global Coal Exit List 2022 : no transition in sight, October 2022

31 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

70

Carbon Tracker, Powering Down Coal: Navigating the economic and financial risks in the last yearsof coal power, November 201871

UNECE, Carbon Neutrality in the UNECE Region: Integrated Life-cycle Assessment of Electricity
Sources, March 2022.
72

Bloomberg NEF, Energy Transition Investment Now On Par with Fossil Fuel, February 2023.

73

International Energy Agency, Energy Technology Perspectives 2023, January 2023.

74

International Energy Agency, Coal in Net Zero Transition: Strategies for rapid, secure and peoplecentred change, November 2022
75

International Energy Agency, Net Zero by 2050: A roadmap for the global energy sector, October 2021

76

IISD, Lighting the Path: What IPCC energy pathways tell us about Paris-aligned policies andinvestments, June 2022
77

International Energy Agency, World Energy Outlook 2022, p.62, November 2022

78

International Energy Agency, World Energy Outlook 2022, p.138, November 2022

79

Bloomberg NEF, Investment Requirements of a Low-Carbon World: Energy Supply Investment Ratios,
October 2022.
80

Reclaim Finance, WEO 2022 – From the fossil fuel age to the clean energy era, November 2022.

81

For more information : International Energy Agency, Phasing out unabated coal : current status andthree case studies October 2021. Beyond Coal, Just transition in the context of European power utilities
and Insurers, August 2020.
82

Ibid.

83

Although these technologies provide an advantage in terms of lowering GHG emissions for electricity
generation, their level of maturity is far too low and the cost of conversion far too high to expect a
reduction in emissions from the sector in the medium term. For example, current production level for
low-carbon hydrogen is only around 0.5% of current hydrogen production being from low-carbon
sources, that is about 0.03% of global fossil gas production (Source : IGU, Global Renewable and lowcarbon gas report, 2021).
84

For more information : International Energy Agency, CCS Retrofit : Analysis of the Globally Installed
Coal-Fired Power Plant Fleet, 201285

Urgewald’s GCEL currently lists 20% of power production or installed power capacity from coalthresholds, and 5 GW of coal-fired power capacity. They will be lowered to 10% of the coal share of
power capacity/generation and 2,5 GW of in the updated plan of 2023.

32 / 33

Recommendations for Insurers and Reinsurers – Underwriting activities
April 2023 – V1

86

For more information : International Energy Agency, Phasing out unabated coal : current status andthree case studies October 2021. Beyond Coal, Just transition in the context of European power utilities
and Insurers, August 2020.
87

For more information: PRI, Converging on climate lobbying: aligning corporate practice with investor
expectations, May 201888

For more information: CERES, Blueprint for Responsible policy engagement on climate change, June
2020
89

For more information : IISD, Investor-State Disputes in the Fossil Fuel Industry, December 2021

90

For more information: PRI, Climate lobbying, March 2022

33 / 33